BILL BONNER LETTER

America’s
Hidden Depression
SPECIAL REPORT 2018

America’s Hidden Depression

By Bill Bonner, Chairman, Bonner & Partners

Today, the world economy is minting one new billion- What we see is claptrap. The dots don’t connect.
aire every two days…
In a labor pool with barely any increase in average
Eighty-two percent of the world’s wealth generated wages, if some wages are going up, other wages must
last year went to the “One Percent.” be going down.

That leaves 18% for the bottom 99%. Many of the 99 And in a country where growth is concentrated in a few
percenters must have gotten nothing at all… or less urban-suburban conglomerates – Washington, D.C.,
than nothing. New York, San Francisco, etc. – there must be a lot of
places where people are not drinking cappuccinos,
Numbers are always a little squirrely. Give them a bribe sending their children to private schools, or listening
or threaten them with violence, and they’ll say practi- to NPR.
cally anything.
In the bottom half of the U.S. population, 117 million
But, spontaneously, more and more numbers are adults earn an average annual wage of $16,000 a year.
coming forth and bearing witness against a fraudulent
economy. These people are worse off than they were at the end
of the last century… and probably worse off than they
They tell us that the feds’ GDP calculations are not to were when the Fake-Money Era began in 1971.
be trusted…
But we’ll let you draw your own conclusion.
Looking at the economic picture in the U.S., we are
meant to see happy people getting richer, with a bub- We asked our research department, headed by the
bly stock market, low consumer price inflation, and able Joe Withrow, to comb through the U.S., county by
jobs for whomever wants one. county, and tell us where people were better off… and
where they weren’t.
That is the picture the news media, the financial press,
Wall Street, and the Trump administration draws. His report can be read in full below. You should read it.
The assumptions and analytical methods he used are
According to the Bureau of Economic Analysis (BEA), important.
wages have risen 36% since the 2008 financial crisis.
The jobless rate has been cut in half. And GDP has In addition to the expected evidence came a revela-
grown 20%. tion: GDP growth is largely counterfeit.

The economy is cranking out more jobs… more mon- Read on…
ey… and more stuff.

America is back!
Bill Bonner
Or is it? Chairman, Bonner & Partners

1
 Bill Bonner's Diary

America’s Depressed Counties

By Joe Withrow, Head of Research, Bonner & Partners

The United States is a large, diverse nation full of 325 By the way, government transfer payments have exploded
million people. The nation is composed of 50 states. by 45% since the 2008 financial crisis. And GDP metrics
Those states are composed of 3,141 counties. And those have captured every single penny of that as “growth.”
counties are very different from one another… as are the
Bill’s right. That is less than unhelpful.
people who inhabit them.

But the Bureau of Economic Analysis (BEA) ignores that

fact in its analysis. Instead, it rounds up economic statis- A Better Way Forward
tics from all over the nation. Then it picks out the aver-
If GDP is not the best measurement of economic health,
ages… and puts makeup on them. It smooths out their
what is?
wrinkles and evens out their complexions.
That’s when the Bonner & Partners research team dusted
For instance, GDP includes “all private and public con-
off our old copy of Human Action – Austrian school econ-
sumption, government outlays, investments, private
omist Ludwig von Mises’ great treatise on economics.
inventories, paid-in construction costs, and the foreign
balance of trade.” Economics, said Mises, was nothing more than the study
of human action – the preferences and choices that peo-
Can you spot the problem?
ple make in their daily lives:
GDP measures government outlays… but those outlays
Choosing determines all human decisions… In making
exceed tax receipts by a wide margin every year. That’s
his choice, man chooses not only between various ma-
where the federal deficit comes from.
terial things and services… All ends and all means are
How is that possible? subjected to a decision which picks out one thing and
sets aside another. No treatment of economic problems
As Bill has pointed out in his Diary countless times, the can avoid starting from acts of choice.
government magically conjures up money into existence
to make up the difference. In other words, economics is about real people making
real choices. It is about individuals making decisions.
Well, it’s not really magic. The government just creates a
bond and sells it to the Federal Reserve… which “writes a Should I go out to eat… or go to the grocery store?
check against itself” to create the money it needs to buy
Should I put a new roof on the house… or a bucket under
the bond.
the leak?
They are very honest about this. The Fed tells you how it
Should I go out to the movies… or turn on Netflix?
works right on its website.
Should I buy Snapchat… or a 1 ounce Gold Eagle?
So, a portion of government outlays is financed by money
created from nothing… and that is picked up as “growth” Should I take the job waiting tables… or collect unem-
in GDP. ployment benefits?

But there’s more to the story. These are the decisions, made in private by millions (and
billions) of people, that determine economic activity. The
The government gives that money to real people – de-
bureaus and think tanks could not possibly measure this.
fense contractors… corn farmers… state government
officials… and, of course, people on the dole. So from the human action perspective, it stands to reason
that the economy grows when people get richer. And it
The people receiving that money then spend it on some-
shrinks when they get poorer.
thing… which is picked up in the “private consumption”
part of GDP. To uncover which American counties are depressed, we
need to find out where people are getting richer. And
That means GDP records the Fed’s “fake money” as
where they are getting poorer.
“growth”… twice.

2
 Bill Bonner's Diary

Improved Unchanged Slightly Depressed Very Depressed Devastated

Doing that is easy. You just go backstage at the BEA We aren’t following any of the official definitions for
where they keep the county statistics… and you take the expansion… recession… or depression…
makeup off.
That’s because we think those definitions are bunk. They
So that’s what we did. are meaningless, specifically because they disregard
human action.

Lots of Wrinkles So, our scoring system is not designed to give you impres-
sive data points regarding economic metrics within a par-
What we found was that some counties have lots of ticular county. All we are doing is telling you where people
wrinkles. Some are covered with pimples. Some haven’t have gotten richer… and where they have gotten poorer.
gotten off the couch in a while.
That’s it.
With that said, we present to you the Bonner & Partners
Map of Depressed Counties. The counties where people have gotten poorer are in a
depression. The poorer the people got, the bigger the
Let me tell you what you are looking at above. depression by our logic.
Remember, this is a proprietary map created from By the way, we are determining which counties are
proprietary data. We are determining which counties richer… and which are poorer… by looking back at where
are depressed, and which aren’t, according to a scoring they were 10 years ago. We are comparing each county
system that we established. to the younger version of itself.

3
 Bill Bonner's Diary

We are not comparing counties to each other or to any And we know that there’s got to be a few folks there who
national average because that would disregard the are doing better now than they were 10 years ago.
uniqueness of each county… and the people living there.
But if most of the other jobs moved to the city… and if
So just because we say people in Clarke County, Iowa got most of the people who used to work those jobs dropped
richer, but people in San Bernardino County, California out of the labor force… then the people in Cullman
got poorer… that doesn’t mean that people in Clarke County have generally gotten much poorer.
are richer than people in San Bernardino. It means that
people in Clarke are richer today than they were 10 years
ago… and people in San Bernardino are poorer today How We Scored Each County
than they were 10 years ago.
Unemployment
After all, isn’t that what really matters at the end of the
• If unemployment increased over the past 10 years,
day?
we assigned one Doom Point to that county.
So here’s what you are looking at: • If unemployment increased by more than 50%
over the past 10 years, we assigned two Doom
When you see green, people in that county have gotten Points to that county.
richer. • If unemployment decreased over the past 10 years,
we subtracted one Doom Point from that county.
When you see blue, people in that county haven’t gotten
richer or poorer. They are just about where they used to be. Poverty

When you see orange, people in that county have gotten • If the poverty rate increased over the past 10
a little bit poorer. years, we assigned one Doom Point to that county.
• If the poverty rate increased by more than 50%
When you see red, people in that county have gotten over the past 10 years, we assigned two Doom
quite a bit poorer. Points to that county.
• If the poverty rate decreased over the past 10 years,
And when you see black, just think of the honorable Ms. we subtracted one Doom Point from that county.
Yellen plowing through that county with a bulldozer.
Labor Force Participation

• If labor force participation decreased over the past

How We Measure Depression 10 years, we assigned one Doom Point to that
county.
Our scoring system is composed of four fundamental
• If labor force participation increased over the past
metrics: unemployment, labor force participation, pov-
10 years, we subtracted one Doom Point from that
erty rate, and inflation-adjusted wage growth. county.
We assigned each of the 3,141 U.S. counties scores ac- Inflation-Adjusted Wage Growth
cording to whether those metrics went up or down over
the past 10 years… and by how much. • If inflation-adjusted wage growth decreased over
the past 10 years, we assigned one Doom Point to
The more unemployment increased… and labor force that county.
participation decreased… and poverty rates rose… and • If inflation-adjusted wage growth decreased by
inflation-adjusted wages shrunk… the poorer people more than 5% over the past 10 years, we assigned
must have gotten in that county. two Doom Points to that county.
• If inflation-adjusted wage growth increased over
It’s important to remember that these metrics were de- the past 10 years, we subtracted one Doom point
signed to give us an idea of the general economic health from that county.
of American counties. It’s not intended to tell us the
* We used the BEA’s statistics for unemployment, pov-
economic story of each and every citizen in that county.
erty, and labor force participation.
We say that people in Cullman County, Alabama got steam- ** We used the BEA’s statistics for wage growth, but
rolled by a Yellen-dozer… But that’s a general statement. we adjusted that number by inflation as measured by
We haven’t met all the people in Cullman County. To the CPI back in 1990 (before they manipulated the
be honest, we haven’t met even one person in Cullman model).
County.

4
 Bill Bonner's Diary

Improved Unchanged Slightly Depressed Very Depressed Devastated

The map shows that people in 2,278 counties have got-

Our Scoring System ten poorer over the past 10 years. As best as we can tell,
1 point or less: The county is better off today than it that means 73% of U.S. counties are in a depression.
was 10 years ago (Green). Seventy-three percent!

Let’s look at each of our metrics. Over the past 10 years:

2 points: The county is not much better or worse
than it was 10 years ago (Blue). • Unemployment has increased in 56% of U.S. counties.

• Labor force participation has decreased in 60% of

3–4 points: The county is slightly depressed (Orange).
U.S. counties.

5–6 points: The county is very depressed (Red). • The poverty rate has increased in 87% of U.S. counties.

• Inflation-adjusted wage growth has decreased in 98%

7 points: The county has been economically of U.S. counties.
devastated over the last ten years.

Which Areas Are Depressed?

Above is the map again, now that you know what you are When we started this project, we had a very good idea of
looking at. what the county map would look like. All the counties

5
 The Bill Bonner Letter

Improved Unchanged Slightly Depressed Very Depressed Devastated

with major cities would be green. Everything else, espe- such productivity.
cially in flyover country, would be orange and red.
Think about this: At the height of the shale oil boom,
We were wrong. several publications reported that a pizza delivery guy in
Sidney, Montana was making $38 per hour. And appar-
As you can see, most of the “green” counties are in fly-
ently somebody opened up a water slide amusement
over country. And everything else is mostly orange and
park in that same town.
red.
I don’t know that either of those items are wise or sus-
This surprised us at first… But it’s easy to see why this is
tainable… but they are evidence of people getting richer.
the case. Look at the map above one more time.
And it wasn’t just Sidney – similar things were happen-
You can see that most of the green is concentrated in
ing in small towns all over shale oil country.
seven states: Texas, New Mexico, Colorado, Wyoming,
Montana, and the two Dakotas. Meanwhile, the rest of the country has struggled to
overcome the political rules, regulations, and restric-
Do you know what they each have in common?
tions that curtail commerce and skim from the value it
Shale oil. produces…

People in those seven states have gotten richer over the

past 10 years because of an explosion in shale oil pro- What It Means
duction… and because of all the commerce that follows Commerce and politics are opposing models.

6
 The Bill Bonner Letter

Commerce is about production and voluntary exchange. pages back in 1936. By 2016, the Federal Register had
It is about creating something that someone else ballooned up to 95,894 pages.
wants… and is willing to give you money for. It is about
And every single one of those pages seeks to slow down
win-win deals, as Bill writes about every day in his Diary.
or skim from commerce in some way.
Commerce is the engine of human progress… something
Every single one of those pages seeks to replace the
apparently lost on most advocates of “progression.”
win-win deals that drive a healthy economy with the
Politics is the enemy of commerce. It seeks to slow com- win-lose deals that drive the growth of government and
merce down with all manner of red tape. its cronies.

Restrictions… regulations… statutes… codes… zoning Every single one of those pages seeks to infringe upon
laws… permits… licenses… They are all implemented the freedom of the 325 million people living in the 3,141
specifically to slow down commerce. unique U.S. counties to transact with each other as they
fit.
Despite it all, commerce plods along… struggling to
overcome the obstacles in its path. Remember, politics is nothing more than “the forcible
appropriation of the labor of others,” as Oppenheimer
Then, politics skims from whatever value commerce
put it. So the more politics you have, the more forcible
manages to produce despite the political roadblocks…
appropriation of labor you have. And the more forcible
thus converting production into plunder.
appropriation of labor, the harder those 325 million
In his book, The State, German physician and sociologist people must work just to stay afloat.
Franz Oppenheimer noticed this dynamic way back in
Let’s take a quick look at the federal government, as it
1908. Here’s Oppenheimer:
existed back in the 1930s.
There are two fundamentally opposed means
According to historian William Manchester, Washington
whereby man, requiring sustenance, is impelled
D.C. was “a slumbering village in summer, largely for-
to obtain the necessary means for satisfying his
gotten the rest of the year. In size, it ranked fourteenth
desires. These are work and robbery, one’s own
among American cities.”
labor and the forcible appropriation of the labor of
others. According to Manchester, President Calvin Coolidge had
usually finished his official day by lunchtime.
Commerce is the means of satisfying needs and wants
via “one’s own labor.” Politics is the means of satisfying Coolidge’s successor, President Herbert Hoover, created
needs and wants via “the forcible appropriation of the a stir by becoming the first U.S. president to have a tele-
labor of others.” phone on his desk. Hoover also employed five secretar-
ies – all previous presidents employed only one.
Here is where I am going with this: the “green” counties
you see on our map are places where people have gotten Yet the Hoover administration was tiny by present-day
richer specifically because commerce has outrun politics standards. Picture this: the land upon which the Pen-
over the past 10 years. These are places where produc- tagon now rests was still farmland when Hoover was in
tive activity has exceeded the political activity seeking office. The Secretaries of State, War, and Navy were all
to restrain and skim from it. housed under the same roof in a building right across
the street from the White House.
They are places where markets have trumped politics.
The federal government was a toothless little thing by
today’s standards. In 1932, there were no federal subsi-
Red Tape Leads dies to farmers, no handouts to the unemployed, and no
to Red Counties tax dollars for public schools. The federal government
did not build hospitals or interfere with medical care
The Federal Register is a daily digest that the federal
procedures.
government has published every day since 1936. It con-
tains regulations, proposed regulations, rules, notices, People were left alone to handle their own affairs as
corrections, and presidential documents from all federal they saw fit.
agencies.
The federal government did maintain a standing army
Think about this: the first publication contained 2,620 in the name of national defense… but it was the kind

7
 The Bill Bonner Letter

of army that would not lead directly to bankruptcy. The economic data in each county. This includes changes in
U.S. maintained the sixteenth-largest army in the world, the poverty rate, unemployment rate, labor force partici-
yet still faced no legitimate threat of a foreign invasion. pation rate, as well as CPI-adjusted wage growth.

In constant dollars, the army in 1932 cost roughly In one of the far right columns of the linked document,
one-eighth of one percent (0.00125%) of what the U.S. you will see “ShadowStats-Adjusted Wage Growth.” This
military costs today. is wage growth adjusted by the CPI as it was calculated
prior to 1990. Unlike today’s CPI figure, it takes into
In 1932, the federal government confiscated less than
consideration the rising cost of living needed to main-
5% of national income to finance its operations. Today,
tain a constant standard of living.
the federal government captures well over a quarter of
national income… and then it borrows a great deal more. As mentioned, we looked to see if economic conditions
improved or declined in counties over the past ten years
That’s what happens when the Federal Register goes
and applied a corresponding number of “doom points.”
from nothing… to 2,000… to 95,000 pages.
The color gauge is as follows:
And then you end up with 2,278 depressed counties.
Green = Improved
Blue = Unchanged
Orange = Slightly Depressed
How to Check Your County Red = Very Depressed
Want to check how your county did in our study? You
Black = Devastated
can view all of our research by selecting your state from
the table below. Regards,
This is all of our data for every U.S. county. As we Joe Withrow
mentioned, we looked at 10-year changes in important Head of Research, Bonner & Partners

Alabama Hawaii Massachusetts New Mexico South Dakota

Alaska Idaho Michigan New York Tennessee
Arizona Illinois Minnesota North Carolina Texas
Arkansas Indiana Mississippi North Dakota Utah
California Iowa Missouri Ohio Vermont
Colorado Kansas Montana Oklahoma Virginia
Connecticut Kentucky Nebraska Oregon Washington
Delaware Louisiana Nevada Pennsylvania West Virginia
Florida Maine New Hampshire Rhode Island Wisconsin
Georgia Maryland New Jersey South Carolina Wyoming

Customer Care: Toll Free: (800) 681-1765, International: (443) 353-4462, Monday–Friday, 9 a.m.–7 p.m. ET, or email customerservice@[Link].
[Link].
© 2018 Bonner & Partners, 55 NE 5th Avenue Suite 100, Delray Beach, FL 33483, USA. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is
prohibited without written permission from the publisher. 
Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not designed to meet your personal situation—we are
not financial advisors nor do we give personalized advice. The opinions expressed herein are those of the publisher and are subject to change without notice. It may become
outdated and there is no obligation to update any such information. 
Recommendations in Bonner & Partners publications should be made only after consulting with your advisor and only after reviewing the prospectus or financial statements
of the company in question. You shouldn’t make any decision based solely on what you read here. 
Bonner & Partners writers and publications do not take compensation in any form for covering those securities or commodities. 
Bonner & Partners expressly forbids its writers from owning or having an interest in any security that they recommend to their readers. Furthermore, all other employees and
agents of Bonner & Partners and its affiliate companies must wait 24 hours before following an initial recommendation published on the Internet, or 72 hours after a printed
publication is mailed.